Saturday, March 22, 2008

Trade and inequality: The role of economists

Dean Baker faults economists for exaggerating benefits of trade, and dishonestly ignoring or downplaying the distributional consequences: who wins and who loses. At the post-autistic economics network.

3 comments:

Personally, I'm still waiting for my justly deseved payoff from my great grandfather's estate for ruination of his buggy whip factory. Those damned cheap automobiles and those evil wall street pushers who sold them to millions of Americans and foreigners. They deserve to pay for the damage they've done me and my family!!!

Thank G_d we have people like you Mike, who are willing to speak out against this horrible "progress" thing and fight for rights like mine to recovery for the damage to my right to never suffer evil technological change. If you'd post a mailing address I'd like to send you a replica of the stone ax by which one of our likeminded brethern put an end to that evil wheel invention. Will people never learn?

Technological development and foreign trade are quite different in their effects: the former produces MUCH larger growth in GNP than the latter. it probably also produces more growth in employment as well. As such we'd probably want to treat the two differently.

But the heart of your "argument" is the implication that the alternative to a do-nothing libertarian tough-luck attitude is Luddism and full compensation. In the real world, rather than your fantasyland, alternatives include keeping tarriffs up and social safety nets: realistic solutions that libertarians shun for the sake of mere ideology.

Brad Delong points out that "the effects of trade on inequality of opportunity are much less than the effects of educational inequities on inequality of opportunity."

So there's a political horse trade available (that's probably already being made): free trade in exchange for reduction of our home-grown educational inequity. Yet another real-world solution that libertarians would reject for ideolgical reasons.